Shell Marks a New High with a $1.5 Trillion Profit

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An increase in refining profits that tripled and robust gas trading helped Shell publish a second quarter profit of $11.5 billion on Thursday, shattering its previous record that had stood for just three months.

The business did not increase its 25 cent per share dividend but did launch a $6 billion share buyback program for the current quarter. According to the statement, shareholder returns would continue to be “above 30% of cash flow from operating activities”.

After a two-year decline, energy businesses’ profits have increased thanks to a quick recovery in demand following the end of pandemic lockdowns and a rise in energy prices caused by Russia’s invasion of Ukraine.

In the first half of 2022, Shell [LON: SHEL] repurchased $8.5 billion worth of shares, and the current repurchase program is substantially larger than anticipated.

“The high oil price environment has aided Shell in producing a record-breaking set of results. Despite the fact that the dividend has not changed, the share buyback program is good news for shareholders “affirmed Stuart Lamont, director of investments at Brewin Dolphin.

Shell stock was up 0.9 percent when London trading began.

On Thursday, TotalEnergies [EPA: TTE], a competitor from France, also announced an increase in its share buyback program and a record quarterly profit of $9.8 billion.

On Wednesday, Equinor of Norway increased its special dividend and increased share repurchases.

Exxon Mobil and Chevron, rivals in the US, release their earnings on Friday.

The benchmark Brent crude price averaged nearly $114 per barrel for the third quarter, keeping oil and gas costs high. The average price of liquefied natural gas (LNG) and benchmark European natural gas both reached record highs in the third quarter.

The adjusted earnings for Shell’s second quarter increased to $11.47 billion, exceeding the $11 billion analysts had predicted in the company’s poll of analysts.

That increased from $9.1 billion in the first quarter of 2022 and from $5.5 billion a year earlier.

According to the business, Shell’s good results were driven by increased energy costs, greater refining margins, and robust gas and power trading, but they were somewhat offset by weaker LNG trading performance.

The quarter saw a tripling of refining profit margins to $28 per barrel. Due to indications that the demand for gasoline in the US and Asia is reducing, they have fallen significantly in recent weeks.

Refinery utilization, which was 84 percent in the second quarter, would rise to 90-98 percent in the third quarter, according to Shell.

The country produced 2.9 million barrels of oil equivalent per day in the second quarter, a 2% decrease from the first quarter.

The second quarter saw a decrease in Shell’s LNG liquefaction volumes, which were down from the first quarter’s 8 million tonnes to 7.66 million tonnes. Due to strikes at its Australian Prelude site and scheduled maintenance, volumes are predicted to drop to 6.9 to 7.5 million in the third quarter.

Shell used the increase in cash flow to make further debt payments, bringing its debt down to $46.4 billion at the end of June from $48.5 billion three months earlier. Its gearing, often known as debt to capitalization ratio, decreased to 19.3 percent.

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